Limiting liability

July 1, 2005 By    


Accidents happen, and in the propane industry far too many tragic mistakes wind up in a courtroom in search of compensation for property damage, personal injury or even death.

In most states there is no protection from liability for the propane business owner, even in cases where it is clear that the marketer had no fault. It’s an issue that has put the propane industry in the midst of one of the biggest debates involving lawsuits, liability and jury awards.

Unlike their counterparts in the natural gas industry who stop at the regulator outside the home, propane retailers service customers all the way to the appliances that burn the gas. That extra assistance opens the door to potential liability if a leaking line goes undetected or a piece of equipment fails.

But in too many cases where Uncle Bob the handyman does his own repairs despite warnings to call a trained serviceman, the resulting tragedy still finds its way to the “deep pockets” of the retailer who provided the explosive fuel. Propane companies are forced to defend themselves in litigation with insurance company lawyers weighing an out-of-court settlement against the risk a court fight.

“The wildcard always is having a jury facing a family that has gone through catastrophic injuries, even if the propane company was not to blame for changing the water heater,” explains Baron Glassgow, National Propane Gas Association’s director of field services for 13 western states.

Slowly, state propane associations are making their cases for some type of limited liability legislation for their industry. In some instances they are winning, or at least reaching a compromise.

After Colorado changed its laws last August, NPGA developed a comprehensive tort reform package for state association executives to help prod their legislators for propane-specific limited liability reform. The materials included sample legislation, testimony, legislative alerts, letters and a sample newsletter.

Today, Georgia, Iowa, Missouri, Utah, Kansas and Kentucky all have limited liability legislation laws that are specific to the propane industry. Several other states have reform bills pending in the legislature.

“We are saying that if a propane retailer does something wrong, hold them liable. But if a customer causes the accident, don’t go back on the company,” Glassgow says. “This way, they can get to a summary judgment much faster and get the propane company out of the litigation.”

Brian Caudill, director of legislative affairs at the National Propane Gas Association, says successfully lobbying for limited liability legislation for propane retailers at the state level is akin to “making sausage in my grandmother’s basement.”

“It’s bloody, it’s noisy and each batch tastes a little different,” he says.

The ability to reach a compromise is key to the success of such legislation. That may mean state associations will not get exactly what they want, but they may at least get something.

“The legislation is fairly streamlined,” Caudill says. “This is an issue that is closer to the people using it [at the state level] and the states can be as specific as to what they are trying to do as possible. That is unlikely to happen at a federal level.”

Glassgow, who oversaw the Colorado association when its law was changed, agrees. “The politics are different in every state. The laws are different in every state. I think each state definitely has to approach it individually, but I think the chances are good that we can chip away at it.”

While the NPGA is an active member of the American Tort Reform Association, including the Lawsuit Abuse Reform Coalition subcommittee, Caudill concedes that winning specific reforms for the propane industry in Washington D.C. is probably unrealistic due to the political influence of the powerful trial lawyers association.

Each state has its nuances, but basically have the same theme – if the propane provider is not responsible for the incident that caused the injury or damage then it cannot be held liable.

Sarah Carlisle, executive director of the Colorado Propane Association, said “any tools we can give our members to limit liability on customer incidents is positive.”

If a propane customer in Colorado does not notify his or her propane supplier when making changes effecting the product, the propane retailer cannot be held liable for any mishaps that may occur.

Carlisle said that while the front-line marketer has not seen a change in insurance premiums, the law should “allow them to keep their insurance if there is a customer incident.”

Carlisle, who joined the Colorado association last March after serving the Nebraska association, said one of the first things she accomplished as director was to notify customers of the change in the state’s law.

“There was no notification requirement in our law,” she said. “But we felt we should tell our customers about the changes.”

One method of notification from the association is in the form of door hangers that each propane retailer can leave for its customers. The information includes an explanation of the law and quotes from the law itself.

“I anticipate additional successes across the country. NPGA would certainly like to see every state receive the same sort of limited liability relief,” Caudill says. “It’s a battle worth fighting.”

State propane liability legislation

Following are excerpts of propane liability legislation in the seven states that have such laws in place. The National Propane Gas Association supplied all information, unless otherwise noted.

Georgia:
In Georgia the 2005 law reads, in part, that a “liquefied petroleum gas provider shall be immune from civil liability if the proximate cause of the injury or damages was an alteration, modification, or repair of liquefied petroleum gas equipment that could not have been discovered by the liquefied petroleum gas provider in the exercise of reasonable care; or the use of liquefied petroleum gas equipment in a manner or for a purpose other than that for which the liquefied petroleum gas equipment was intended to be used or for which could reasonably have been foreseen, provided that the liquefied petroleum gas provider or the manufacturer of the liquefied petroleum gas equipment has taken reasonable steps to warn the ultimate consumer of the hazards associated with foreseeable misuses of the liquefied petroleum gas equipment.” www.legis.state.ga.us


Iowa:

The statute in Iowa reads, in part, “any action or claim seeking damages for personal injuries or damage to property arising out of injuries or loss due to defects in a liquefied petroleum gas system, or arising out of the condition of any portion of that system, the negligence or other fault of the customer, owner, or other person in possession of or making use of that system relating to the installation, modification, maintenance, or repair of the system or damage incurred to the system, shall be admissible in evidence and considered by the finder of fact if such conduct was a cause in fact of the accident or condition leading to the injuries or damages…”


Missouri:

The 2002 Missouri statute reads in part: “No person registered pursuant to this section and engaged in this state in the business of selling at retail of liquefied petroleum gas, or in the business of handling or transportation of liquefied petroleum gas over the highways of this state shall be liable for actual or punitive civil damages for injury to persons or property that result from any occurrence caused by the installation, modification, repair, or servicing of equipment and appliances for use with liquefied petroleum gas by any other person unless such registered person had received written notification or had other actual knowledge of such installation, modification, repair, or servicing of equipment and appliances and failed to inspect such installation, modification, repair, or servicing of equipment and appliances within thirty days after receipt of such notice or actual knowledge …”


Utah:

Signed in March of this year, the Utah law reads, in part: “In any action for damages for personal injury, death, or property damage in which a seller, supplier, installer, handler, or transporter of liquefied petroleum gas is named as a defendant, it shall be an affirmative defense to liability that the equipment or appliance which caused the damage was altered or modified without the consent or knowledge of the seller, supplier, installer, handler, or transporter; or the equipment or appliance was used in a manner or for a purpose other than that for which it was intended.”


Colorado:

The state of Colorado’s 2004 legislation reads, in part, that “no legal action shall be commenced or maintained against any person engaged in this state in the business of selling at retail, supplying, handling, or transporting liquefied petroleum gas if the alleged injury, damage, or loss was caused (by) alteration, modification, or repair … done without the knowledge and consent of the liquefied petroleum gas seller, supplier, handler, or transporter, or the use of the liquefied petroleum gas equipment or a liquefied petroleum gas appliance in a manner or for a purpose other than that for which the equipment or appliance was intended and that could not be reasonably have been expected.”


Kansas:

In 2004 Kansas lawmakers passed a provision on lawsuits against liquefied petroleum gas marketers. It reads, in part: “In any action brought against a liquefied petroleum gas marketer for personal injury or property damage, an end retail user’s damages shall be reduced by the comparative negligence of the end retail user or any third party to the extent the action of the end retail user or third party contributed to cause the personal injury or property damage, including, but not limited, to, the end retail user’s or third party’s: (1) Modification, repair, service or alteration of the end retail user’s liquefied petroleum gas system; or (2) failure to conduct a leak check or inspection of the liquefied petroleum gas system after any modification, repair, service or alteration of the end retail user’s system.”


Kentucky:

In 2005 the Kentucky general assembly also made it clear that a propane dealer is not responsible for damages caused by installations or alterations not performed by the dealer. The law reads, in part, “that installation and maintenance of gas-consuming appliances be in compliance with manufacturer and administrative requirements; limit liability of licensee for damages resulting from nonconforming installation or maintenance.” www.kyretail.com

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